Truck Industry 2020: The Future Is Global: Norbert Dressler, Jochen Gleisberg

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Roland Berger Strategy Consultants, Germany

05/2009, all rights reserved
www.rolandberger.com
Norbert Dressler, Jochen Gleisberg
Truck industry 2020: The future is global

When a market of global significance departs from a long-standing
pattern of healthy growth, it is time to ask some searching questions.
Is it "just" the economic downturn that has put the brake on the
truck industry? Or are there other, more fundamental factors at
work? Where is the market heading? Are key players ready for the
challenges and changes ahead? And if not, how can they prepare
themselves for a future that, in many ways, has never seemed so
uncertain?
These are the vital issues addressed by Roland Berger Strategy
Consultants in the study "Truck industry 2020: The future is global".
Drawing on in-depth research and personal interviews with many
top executives in the industry, the study takes stock of an industry
that seems to have stalled and now urgently needs strategies
to shift back into gear.
Norbert Dressler, Jochen Gleisberg
Automotive Competence Center
Contents
Executive summary
1. Introduction
1.1 Trucks at the crossroads
1.2 Methodology, sources and segmentation
1.3 Macroeconomic background and the current crisis
1.4 Fundamental drivers of change in the truck industry
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2. Incumbents and challengers

2.1 OEMs in the triad regions Under pressure from all sides
2.2 The rise and rise of emerging markets Strong growth even
in times of crisis
2.3 The advance of globalization No longer one-way traffic
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Case study:
The Indian truck market Downsized engines, upsized profits
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3. Convergence in a world of differences

3.1 Where the world's markets differ
3.2 and how they are converging
3.3 Clearly delimited market segments
3.4 becoming increasingly blurred
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4. The future is global Conclusions, options and actions

4.1 Three winning strategies for triad OEMs
4.2 Three winning strategies for OEMs in emerging markets
4.3 Going global Final remarks
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About the authors
37
International offices
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Executive summary
Having motored ahead with forceful growth for many years, the truck
industry was visibly slackening the pace before the world's financial markets
hit the skids. When this turmoil developed into a fully-fledged economic
crisis, the industry shifted into reverse.
"Truck industry 2020: The future is global" examines the current changes
in the industry landscape, explores the influences that are driving them
including the current macroeconomic context and other, more fundamental
factors and looks at where the industry is likely to be in 2020. Based
on interviews with more than 50 top executives from truck OEMs and
suppliers serving key markets in all the world's major truck regions, it also
asks what manufacturers should and must do now to prepare themselves
for the challenges of tomorrow.
Faced with rising fuel prices, stricter environmental legislation and
generally saturated markets, OEMs in the triad markets are having to
contend with flat or shrinking demand at home. To compensate, they are
turning their attention to emerging markets (especially the BRIC countries)
that are still experiencing buoyant growth, or that are recovering faster from
the financial crisis. For their part, manufacturers based in emerging markets
are themselves looking to expand into foreign markets mostly into other
emerging countries, but in some cases into triad regions too.
The truck market as a whole, then, is globalizing rapidly; and this statement applies not only to OEMs, but also to customers. The key criteria that
influence purchase decisions are becoming more and more alike in different
regions. As a result, OEMs can develop a single, common concept to serve
the various segments across different regions. This approach generates
additional potential for globalization in the truest sense of the word.
The key question for OEMs in either region is how best to exploit their
own strengths and existing market opportunities, weigh up the relevant
risks and benefits, avoid potential pitfalls, and so turn globalization to
their own advantage.
We examine the obvious differences that exist between the triad and
emerging markets on the one hand, and between the world's premium,
budget and low-cost segments on the other. In doing so, we find that OEMs
moving in either direction must take account of these differences and their
gradual convergence across segments in order to successfully implement
their globalization strategies.
As premium triad OEMs "downgrade" their offerings to penetrate the

budget and perhaps even low-cost segments in developing countries,
emerging market OEMs are seeking the knowledge and technology they
need to move into the budget and premium segments. We identify three
winning strategies for each type of OEM:
Winning strategies for triad OEMs
1. Enter the emerging market in the higher budget (or lower premium)
segment, adapting premium products to local market requirements
2. Enter the emerging market in the low-cost (or lower budget) segment
by means of local engineering, sourcing, production or, sales
3. Enter the emerging market in the low-cost (or lower budget) segment,
meeting current market requirements, and then after successfully implementing strategy 2, follow up by exporting trucks as the second step
Winning strategies for emerging market OEMs
1. Export a successful low-cost truck model to other emerging markets
2. Grow with the domestic market as it develops in terms of technology,
gradually moving into the budget segment
entering more developed markets but not yet those of triad countries
as soon as the necessary requirements can be met (as an extension of
strategy 2)
In the discussion that follows, we provide examples of each of these
strategies. We also present an in-depth case study of the Indian market.
Following this, we examine how the world's markets and market segments
differ and how they are converging. Finally, we outline the very real risks
that OEMs must bear in mind as they seek to apply the strategies we
propose. Thus, business models must be adapted appropriately on the basis
of a clear strategic direction. In an increasingly globalized world, platform
architectures and local sourcing must be leveraged to develop global truck
concepts. The process of admitting necessary regional differences must
be streamlined. Global networking and organizational issues must be
addressed. And market players must not underestimate the importance
of a carefully considered branding strategy, possibly involving multiple
sub-brands under a strong global parent brand.
1. Introduction
1.1 Trucks at the crossroads
In terms of growth, trucks have for many years represented one of the most
important sectors of the automotive industry. After years of positive market
development, however, the sector today finds itself in a downturn. With the
threat of still harder times ahead, the whole industry is in a state of flux.
Established OEMs in the triad markets Western Europe, North America
and Japan are facing increasing pressure. Rising fuel prices, stricter
controls on exhaust emissions and general saturation levels were already
beginning to flatten their home markets. Now, the economic downturn
triggered by last year's financial crisis has compounded the gloom.
In recent years, the natural response of these OEMs has been to intensify
their focus on emerging countries where growth generally remains unbroken especially China and Brazil. This in turn is putting pressure on
local truck manufacturers in developing markets, who are having to defend
their turf against incursions from triad OEMs. Nor is the expansionary urge
entirely one-sided: Several local manufacturers in emerging markets are
themselves now looking to expand into foreign markets.
In short, the truck industry is moving more and more toward globalization.
In so doing, it is following in the tracks of the passenger car sector, which
underwent a similar reshaping in the late 1990s. Increasingly, truck manufacturers like the producers of passenger vehicles before them are
setting their sights on global markets.
As things stand, the established triad market OEMs are still in the driver's
seat and are best placed to reshape the industry. The seemingly irresistible
rise of emerging market manufacturers is quickly eroding their lead,
however. Aware of the dangers, most established triad market OEMs
have already entered emerging markets and are trying, by various ways
and means, to enlarge their footprint there. They face country-specific
legal restrictions and distinct customer requirements. Though we expect
a general shift in segment development, low-cost trucks seem at the
moment to be the key to those markets. Successfully targeting the low-cost
segment requires a highly specialized business model, however. For their
part, emerging market manufacturers are driven by the need for new
technology. Accordingly, they are striving to forge partnerships with triad
market OEMs a fact reflected by the increasing number of joint ventures
in emerging markets.
Our new study "Truck industry 2020: The future is global" examines the
current changes in the industry landscape, explores the influences that are
driving these changes and looks at where the industry is likely to be in 2020.
Crucially, it asks what OEMs should and must do now to prepare themselves
for the challenges of tomorrow.
1.2 Methodology, sources and segmentation
The new study is based on extensive research into the truck industry conducted in fall 2008/winter 2009. During this period, we interviewed more
than 50 top executives from truck OEMs and suppliers serving key markets
in all the world's major truck regions. These structured, two-hour interviews were based on extensive questionnaires that enabled us to conduct
an exhaustive qualitative analysis of the data collected. The companies
surveyed in the course of our study together account for about 50% of
the world's truck market (see Figure 1).
The input from these interviews was then collated and analyzed in
light of our own in-depth investigation of the markets. To validate the
data and enable practical conclusions and recommendations to be drawn
from our analysis, we segmented the truck market on a variety of levels.
We performed a comparative analysis of the truck sectors in both the
established triad markets and the world's emerging markets. We also
distinguished between three main market segments, which we have
termed the premium, budget and low-cost segments.
To facilitate a 360 view of this market, it is also necessary to distinguish

between three weight classes (light commercial vehicles of under 6 tons,
medium-duty vehicles of between 6 and 16 tons, and heavy-duty trucks of
over 16 tons), and occasionally to differentiate further between long-haul,
construction and distribution vehicles.
1.3 Macroeconomic background and the current crisis
Many players from emerging markets enjoyed significant growth rates in
recent years and have already reached a considerable size. Dongfeng Motor
Co. (DMC), the largest commercial vehicle OEM from an emerging market,
has rapidly expanded its truck business, especially in the Chinese market.
Established in 1969, the company boosted its truck sales to 178,000 units
in 2008, posting double-digit growth in recent years. Many other emerging
market OEMs have similar stories to tell. Russia's Kamaz and China's
ChongQing Heavy, for example, likewise reported double-digit growth
between 2005 and 2008. Their expansion has primarily been enabled by a
booming economy in their home markets that has consistently stimulated
the road transportation, logistics and construction sectors.
Triad market players have generally shown much lower growth rates
than their counterparts in emerging countries. The economic downturn
unleashed by the financial crisis is affecting developed economies particularly badly. In advanced economies, the OECD expects average GDP
to shrink by between 0.5% and 1% in 2009. In some markets such as the
US and Germany, the recession will even be worse. The truck industry is
suffering acutely from the consequences of the crisis. Indeed, the truck
market has now shifted into reverse right across the triad countries.
Many fleet customers, including logistics/transportation providers and
construction firms, have canceled existing orders. And many banks are
tightening their lending standards for corporate clients, making it harder
for firms to replace their truck fleets.
The negative effects on sales are already apparent in Western Europe and
the US. In the US, a cyclical upturn and introduction of a new emissions
regulation in 2010 might buoy the market slightly and temporarily. Even
so, analysts expect the volume of commercial vehicle sales to decrease
compared to the levels of past years. Some established triad OEMs focusing
on the North American market Daimler, for instance reported revenue
losses in the US as early as 2007. OEMs with most of their business in
Europe have so far been stable, but future orders indicate that here, too,
a sharp decline is inevitable. Scania, for instance, conceded a 98% drop in
new orders in the fourth quarter of 2008. There are also indications that,
in the first quarter of 2009, the order intake will again have dropped by
more than half.
The current downturn, coupled with the historic trend in sales in Western
Europe and the US, is clearly reflected in the data for heavy-duty trucks
(see Figure 2).
1.4 Fundamental drivers of change in the truck industry

Although the bleak economic outlook is clearly placing a heavy burden on
the truck industry, it is by no means solely to blame for the changes taking
place in the market. Structural shifts were already in evidence before the
recent downturn, for a number of reasons. Both the causes and effects
of these shifts differ in a number of ways between the established triad
markets and the world's emerging markets. Hence the market players in
each region respond in different ways as we discuss in the next section.
2. Incumbents and challengers

2.1 OEMs in the triad regions Under pressure from all sides
Truck OEMs in the established triad markets have been busily building up
their capacity in recent years. At the same time, they face the challenge of
reducing emissions in order to meet tighter regulations. A steady stream of
ever stricter new legislation (such as EPA 10 and EURO 6/7) is gradually
coming into force. This means higher costs for truck manufacturers, such
as for exhaust aftertreatment to comply with prescribed emissions norms.
Material costs and fuel prices have been on the rise, too. While the economy was still buoyant, these added burdens could be absorbed to some
extent. As economic growth slows, however, OEM customers are postponing further investment and trying to extend the lifecycle of their
truck fleets.
At the same time, customers in established markets are becoming increasingly sensitive to the total cost of ownership (TCO), which simply means
all the costs of an investment over its entire lifecycle. In the case of trucks,
this includes the initial investment plus the cost of fuel, drivers, repairs and
maintenance. Another factor driving change is that trucks are becoming
more and more interchangeable and, hence, commoditized. When this
happens, product differentiation becomes increasingly difficult. OEMs thus
find themselves forced to place greater emphasis on developing solutions
rather than focusing purely on truck sales.
Not surprisingly, these pressures are having a profound effect on the
structure of the industry. Our study identifies clear signs of consolidation
in the triad markets, with the number of established OEMs diminishing
significantly in recent years (see Figure 3). This trend is likely to continue
over the coming decade. Some consolidation has even taken place among
emerging market manufacturers. Another visible trend is the increasing
number of joint ventures between established triad OEMs and emerging
market OEMs a further sign of change in the structure of the global
truck industry.
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2.2 The rise and rise of emerging markets Strong growth even
in times of crisis
Emerging markets paint a different picture. Chinese and Indian OEMs have
consistently realized double-digit revenue growth since 2005. Nor is this
merely a short-term phenomenon: Increasing global transport volumes (such
as the 4.9% annual growth that is forecast for China through 2020), strong
economic expansion and developing road infrastructures will continue to
boost demand for trucks for many years to come.
In 2007, the markets for commercial vehicles over six tons in Russia,
Brazil, China and India had a combined volume of approximately
1.2 million vehicles. According to Andreas Renschler, head of Daimler,
every second truck sold anywhere in the world is now sold in one of the
four BRIC markets. Clearly, the big players want a piece of this action.
And for Renschler, now is the time to act:
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"BRIC countries are a key element of the growth strategy of Daimler Trucks
and Daimler Buses. These markets grew by 120% in 2002 through 2007.
Daimler Trucks' sales in BRIC countries were up 29% in 2007 compared
to 2006 and up 34% year on year in the first half of 2008. In Brazil, and
indeed in South America as a whole, Daimler Trucks and Buses is already
the market leader. In India, we have established a joint venture with our
local partner Hero, while in China we are engaging in active negotiations
with Foton." Since this statement was made, Hero has withdrawn from
the said joint venture. Daimler has nevertheless decided to go ahead and
establish a production presence in India on its own. At the end of 2008,
Daimler also acquired a 10% stake in Russian truck OEM KAMAZ in order
to gain access to this fast-growing market.
The BRIC markets are expected to show ongoing growth in the years ahead.
Figure 4 shows how the trend has developed since 2005 and how we and
the top executives we interviewed for this study expect it to continue in
the period up to 2020. Scania, for example, plans to double the share of
revenue it generates outside its European home market from its current
level of 30% to 60% by 2020. Much of this projected growth will be
focused on the BRIC economies.
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2.3 The advance of globalization No longer one-way traffic

As we saw earlier, established triad OEMs are increasingly pursuing a
strategy of globalization in the hope of compensating for the lack of growth
on their domestic markets. But they're not the only ones to have noticed
that there is money to be made in emerging economies. Local OEMs
especially those in India and China have also picked up the trail.
These manufacturers are steadily increasing their global market share.
Traditionally strong in the low-cost segment of the truck market, they are
now gradually building capacity and entering the higher-standard segments.
Many acquire the necessary technology by committing to joint ventures
with triad market manufacturers and/or key suppliers. The number of
such partnerships is growing almost by the day: Examples include the joint
venture between Volvo and Eicher in India and between IVECO and SAIC
in China. As Figure 5 clearly shows (see below), both triad and emerging
market OEMs plan to sharply increase the revenue they generate outside
their home markets between now and 2020 primarily in the world's
fastest-growing regions.
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Increasing globalization in the truck industry also brings a new risk for
established triad OEMs. A number of manufacturers from emerging countries have already entered, or are on the point of entering, more mature
markets such as Russia. Their aim is to take on established truck producers
in markets with potential for budget and premium trucks (see the discussion
of developments in individual segments below). Some examples of this
development are already visible: Indian manufacturer Tata now delivers
higher-end vehicles to South Korea and South Africa. AMW does the same
to South Korea. Moreover, both companies are considering further
international expansion.
The reshaping of the global landscape is still at an early stage. For the
time being, leading global OEMs remain in the driver's seat. However,
the challenge from their emerging market rivals is very real and growing.
Leading OEMs must move swiftly to find a path through the maze of
globalization. To do so, they need a clear understanding of what the
markets look like today and where they are headed. This is all the more
important in light of one important finding of our study: Some of the key
differences that exist at present are diminishing in importance. Both the
drivers of change and, in some cases, OEMs' responses to these changes
are leading to convergence in the world's truck markets.
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Case study: The Indian truck market

Downsized engines, upsized profits
The Indian truck market grew at the decidedly impressive rate of 24% per
annum between 2002 and 2008, reaching 420,000 vehicles by the end of
last year (see Figure 6). In 2009, the truck market has also been hit by the
financial crisis, and a volume reduction of 50% is expected. Freight carriers
in the under 3.5 ton class occupy the largest segment of the market. The
second most important segment is the 7.5 to 25 ton class. Only 6% of
trucks in India carry loads of more than 25 tons.
The segmentation of the market into very small trucks (under 3.5 tons) on
the one hand and large trucks (over 7.5 tons) on the other, with not much
in between, is attributable quite simply to local road and traffic conditions.
The huge infrastructure network known as the "Golden Quadrilateral"
connects India's four leading cities. The roads in this network are at least
of sufficient quality and safe enough to facilitate the professional transportation of goods in long-haul trucks. Road freight is carried from major ports
to the cities (and vice versa) along these routes. Agricultural products too
are transported from hinterland regions to India's cities and ports via this
infrastructure. Since 2002, this development, coupled with rampant
industrialization, has boosted sales of medium and heavy commercial
vehicles to compound annual growth rates (CAGRs) of up to 50%.
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The second mainstay of the Indian truck market is the small vehicle segment for inner-city transportation. In the past, this segment was occupied
primarily by the cheap three-wheeled rickshaws that could be seen, often
grossly overloaded, all over the subcontinent's city streets. In this segment,
local champion Tata has scored a remarkable success with its Tata Ace
remarkable above all because the Ace was priced 25% higher than the typical motorized rickshaws. Demand for a small inner-city truck that was still
only half as expensive as a typical commercial vehicle was strong. Tata also
cleverly marketed the vehicle only in white, so as to eliminate color changing time in the paint shop and thereby increase output. Although margins
for the vehicle were low, the volumes and corresponding economies of scale
made it highly profitable, allowing Tata to build a new plant in Northern
India to ramp up production to 250,000 units a year.
Broadly speaking, price levels in India are well below those in Europe. However, there is a measure of variation on price between local manufacturers'
brands, vehicles marketed by joint ventures run by local and triad OEMs,
and vehicles imported from triad manufacturers (see Figure 7). Indian
manufacturers are upgrading their trucks, moving away from the traditional
wooden cabins and high emissions to more professional, environmentally
friendly trucks. Conversely, OEMs from the triad regions are effectively
downgrading their trucks to provide simpler and more robust versions.
Given local road conditions and the fact that many commercial vehicles
are used in construction, robustness is a must-have feature on this market.
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Costs can be reduced by scaling down engine sizes, for example, as

traffic conditions make speeds of over 60 km/h almost impossible anyhow.
Powertrains must be muscular and durable as Indian commercial vehicles
are routinely overloaded and heavy loads put a major burden on the clutch
(the maximum weight limits recommended by OEMs are treated more as
indicators than imperatives). Even so, there is no real need for engines that
deliver more than 200 bhp. Local production and sourcing help facilitate
lower prices, too. 100% sourcing enables vehicles to be produced at a
markdown of around one third relative to manufacturing in Europe.
In general, Indian commercial vehicles can be considered relatively lowtech by Western standards. All the same, India introduced its first emissions
limits as far back as 1989, and in 2003 the country announced that EURO
norms 2 through 4 would be introduced by 2010 under the aegis of the
National Auto Fuel Policy. For medium- and heavy-duty trucks, the EURO 3
norm will become binding throughout the country in 2010. EURO 2 has
already been in force for light commercial vehicles since 2005. In passing
this legislation, the Indian government aimed to replace the old vehicles
on the roads today with new ones that satisfy modern emissions and safety
standards. ECE norms were introduced back in 2000 and are being
tightened constantly to improve road safety. While such regulations
will not bring technology into line with Western standards, they will
still lead to a significant improvement on today's very basic level.
Players on the Indian market
In the 7.5 tons and over segment, Tata and Ashok Leyland are the two
dominant players. They are also the fastest-growing companies on the
market, boasting market shares of 64% in the case of Tata and 25% in
the case of Ashok Leyland.
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Other important players include Eicher Motors, which has a 6% share

of the overall truck market, and Swaraj Mazda. Of the international truck
OEMs, Volvo currently sells a few vehicles in the medium- and heavy-duty
segment. Scania, too, produces robust heavy-duty commercial vehicles for
the construction segment that are basic and technologically less sophisticated versions of its existing models.
In 2006, MAN formed a joint venture with Force Motors, building a plant
in Pithampur (between Mumbai and Delhi) with the capacity to roll out
24,000 light to heavy-duty commercial vehicles. The plan is to export 50%
to Asia, Africa, the Middle East and Eastern Europe. MAN plans to pair its
leading-edge technology with the low-cost capabilities of Force Motors,
thereby building vehicles that satisfy MAN's high quality standards at a
significant cost advantage. At about the same time, IVECO signed a memorandum of understanding with Tata. The aim here was to explore options
for cooperating on production and development.
Another new player on the market is Daimler. Unlike MAN and IVECO,
however, Daimler's plans to work with a local partner in this case India's
Hero Group have been thwarted by Hero's withdrawal from the planned
joint venture. Even so, the German company remains committed to local
production in India and now intends to go it alone, producing light,
medium-duty and heavy-duty commercial vehicles as of 2010. Initially,
slimmed-down versions of Daimler's premium Axor heavy-duty and Fuso
Canter light duty models will be launched for the local market.
Local players, too, are expanding both within India and internationally.
Tata, for example, has extended its reach to other emerging countries by
acquiring Daewoo Commercial Vehicle Company in South Korea and the
Brazil-based bus and coach body maker Marcopolo Motors Ltd. (TMML).
Meanwhile, one of Ashok Leyland's plans is to invest around INR 60 billion
(nearly EUR 900 million) in the commercial vehicle segment. Part of this
money will be used to expand annual production capacity from 83,000 to
100,000 units. At the same time, the company is stepping up internationalization with a view both to other emerging markets and the triad markets.
In 2006, Ashok Leyland snapped up Avia's Prague-based truck business.
Two years later, it committed to a joint venture with Nissan Motors Co. Ltd,
Japan, whose mission is to develop and produce light commercial vehicles
for both domestic and export markets.
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Market drivers
India's general economic development, combined with large-scale infrastructure projects such as the Golden Quadrilateral, hydropower projects,
port development and mining projects, have driven strong growth in the
truck industry in the past. Even before the financial crisis struck, however,
a slowdown in demand for medium- and heavy-duty commercial vehicles
was foreseeable. Rising diesel prices and high interest rates pushed up
freight prices and thus eroded profit margins on transporters. As a result,
fleet customers postponed the purchase of new vehicles. Concurrently,
changes in the regulatory environment (including bans on HCVs within
some city boundaries at certain times) and innovative products (such as
the Tata Ace) have encouraged a discernible shift toward LCVs. The market
for medium- and heavy-duty trucks thus shrank by 6% even in 2007, when
India's economy was still expanding at 9% per annum. Now that the global
economic downturn too is making itself felt, stagnation or at best slow
growth can be expected in these segments.
On the other hand, the LCV market is benefiting handsomely. Changes in
legislation, the affordable initial investment and low operational costs for
these smaller vehicles is driving brisk demand, especially for trucks under
3.5 tons. This segment will also profit from the spread of urbanization and
increased cargo shipment possibilities.
Summary
It is hardly fair to call a market of 1.1 billion people a microcosm. For the
purposes of this study, however, this is precisely what India is: a microcosm
that reflects all the key developments currently taking place in the macrocosm of the world's rapidly globalizing truck industry. While international
players are targeting India with slimmed-down versions of their models for
specific usages, local manufacturers are building up their knowledge and
low-cost production capabilities to expand into other emerging countries
and even triad markets.
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3. Convergence in a world of differences

As we have seen, our research reveals significant differences between
the markets in industrialized countries and those in developing countries.
These differences relate primarily to technical requirements, environmental
legislation and safety regulations. We also find variations between markets
in terms of what customers expect of products and what drives purchase
decisions. To take just one example, while TCO considerations are gaining
rapidly in importance in the triad economies, in emerging markets purchase
decisions seldom come down to the total cost, surprising though this may
seem. In fact, the price tag on the vehicle is still the dominant factor in the
majority of cases. Emerging markets themselves also currently present a
varied picture, and to some extent will continue to do so in the future
(see Figure 9).
Other differences relate to the features customers expect in different classes
of vehicle. Particularly in emerging markets, driver comfort has a powerful
influence on purchase decisions for heavy-duty long-haul trucks, but is less
important for the medium-duty trucks that generally cover shorter distribution radii. The same goes for service packages and maintenance issues.
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3.2 and how they are converging

Despite these differences, industrialized and developing markets are
gradually and, it seems, inexorably converging. This is clearly the case
with regard to environmental standards. Global standards in environmental
regulation such as EURO 1-7 and government commitments to meet these
standards are bringing truck markets ever closer together. Figure 10 gives
an overview of the timetable for emissions reduction in the European
Union, the US, India and China.
For historical reasons, convergence in the NAFTA market will be limited.

Many large fleets in this region have their own maintenance infrastructures,
for example. Nevertheless, tighter emissions standards will push the convergence of powertrain concepts.
In many ways, the convergence of environmental standards and safety
regulations is a boon for those OEMs that are seeking to globalize, as it
alleviates some of the difficulties associated with global expansion. As more
and more major emerging markets follow the lead given by triad markets
in emissions legislation, this will also affect technological requirements
concerning exhaust aftertreatment, alternative drives, and so on.
21
The convergence of legal frameworks already entails a convergence of

relevant product technology. For example, the emergence of selective
catalytic reduction (SCR) technology and the success of aftertreatment
systems point to an increased focus by all OEMs on emissions legislation.
Even in individual countries, the introduction of a new emissions standard
can create fresh demand in the period prior to its enforcement. Such is the
case with the introduction of EPA10 in the US in 2010, for instance. This
change is expected to generate stronger demand for compliant vehicles in
2009 and 2010. Similar phenomena can be observed in many countries
around the world.
In the short term, however, emissions improvement will remain a
tricky sell in all emerging markets. As one manufacturer says, "Clients
are interested in, but not willing to pay extra for 'clean' technology."
The expectation is that this attitude will change over time.
The trend toward convergence is apparent in many other areas too:
> TCO: Attitudes toward the total cost of ownership are changing. TCO
is already of crucial importance to buyers in triad markets. All our interviewees without exception thought that it would gain in importance
in emerging markets too in the period to 2020
> Emission regulation: Views differ on the relative importance of emission
regulation. In the triad markets, however, this issue is clearly gaining in
importance. In future, the regulation of emissions is expected to give
a powerful boost to globalization
> Safety regulation: Stricter safety regulations are expected in both
markets, although the changes are likely to be more pronounced in
emerging markets. This development too will definitely have some
influence on globalization in the truck industry
> Driver comfort: Long established as a prerequisite in triad markets, driver
comfort is considered one of the least important qualifications for truck
purchase today in emerging markets. Our interviewees agreed that driver
comfort is currently a nice-to-have feature, as long as it doesn't compromise the cost of the vehicle. The survey nevertheless showed a major
leap in this category between now and 2020, indicating a gradual shift
toward a global expectation for comfort (see Figure 11).
22
> Quality: The survey points to a very similar, high level of expectations
regarding quality in both triad and emerging markets. While expectations
are slightly lower in emerging markets, quality appears to have become
a global standard already
> Robustness: Our respondents were very clear about the relative
importance of robustness, which is expected to remain more or
less unchanged in future
> Service networks: Views differ on the relative importance of service
networks for triad and emerging market OEMs. Manufacturers in both
regions agree that service networks play a vital role in the triad markets.
However, while emerging markets already attach great importance to
providing a strong service network in their home markets, triad OEMs
do not view this as a critical offering in developing offshore markets.
This finding highlights the difficulty for triad manufacturers of establishing service networks in emerging markets. Here again, however, the
differences of opinion tend to disappear in projections for 2020
> Captive maintenance/repair services: Perception of this issue is closely
tied to the importance of the service network. Triad-based manufacturers
currently consider handling repairs for their own installed base as very
important in emerging markets. However, the global consensus is that
the importance of captive maintenance and repair will wane by 2020
23
> Financing: All our interviewees believed that the triad markets today set
much greater store by financing considerations than emerging markets.
This difference too evaporated in interviewees' perception of the market
in 2020
> Technology: Technology continues to be a differentiating feature between
triad and emerging markets. Whereas triad manufacturers compete on
technology, manufacturers in emerging markets must first master quality
and affordability. Once they do and it is expected that they will by
2020 they too will increasingly focus on technology
As we will see below, the changing importance of these factors significantly
affects the future development of the various segments. For example, as
TCO becomes a more important consideration in emerging markets, the
budget and premium segments will gain ground at the expense of the
low-cost segment.
To summarize, at present the differences between emerging and developed
markets are largely reflected in the relative strengths and weaknesses of
the companies they produce. On a whole range of issues, we still see clear
differentiation between triad and emerging market OEMs. However, these
differences will gradually disappear in the context of a globalizing truck
industry. For a comparatively brief interval, this fact gives triad OEMs an
opportunity to expand into new markets and exploit global synergies. As
markets converge and global standards gradually become established, customers in emerging countries will increasingly expect the same technical
features as their peers in the West. The ability of indigenous OEMs to
satisfy this demand will remain limited for some time to come.
3.3 Clearly delimited market segments
Our research leads us to split the global truck market into three major
segments: premium, budget and low-cost. The premium and low-cost
segments represent the upper and lower ends of the market. The budget
segment is the area in between trucks produced by established triad
OEMs specially adapted for emerging markets, with fewer electronic
features or a reduced comfort level in the vehicle, for example.
Figure 12 describes these three market segments in terms of relevant
legislation, product features and price.
24
A comparison of specific vehicles, as in Figure 13, makes the differences

between the premium and low-cost/budget segments all the more apparent.
Product features differ substantially between premium trucks manufactured
by triad OEMs and low-cost/budget trucks produced by Indian or Chinese
OEMs, say. The vehicles also contrast sharply in terms of their emissions,
safety, product features and, of course, price. All these issues reflect varying
customer requirements in different markets at the present time.
25
3.4 becoming increasingly blurred

Yet again, the static view of "as-is" market segmentation differs considerably from what our interviewees expect to see in 2020. We found that
triad OEMs and manufacturers from emerging markets are already pursuing
similar patterns in terms of their strategies for target segments. There are,
however, a number of differences between different regions and countries.
For example, one Chinese OEM disclosed that "Chinese OEMs will try to
touch the premium segment while maintaining their advantage in budget
and low-cost products." Conversely, one European OEM is expecting to
enter three emerging markets with a premium product, adapting its vehicles
to meet the needs of local markets. Our interviewee from the company in
question was disarmingly frank: "This is our only option to quickly enter
the market, as we don't have the portfolio of products today."
Clearly, OEMs in emerging and triad markets alike are waking up to the
implications of globalization for the industry, even if they approach the
issue from different angles. The key question is: What exactly does the
future hold for the different market segments?
At present, the low-cost truck segment predominates in emerging markets
and will continue to do so at least in the medium term. However, we expect
to see shifts in the development of market segments as markets gradually
mature between now and 2020. In response to these changes, OEMs from
triad markets will enter emerging markets or ramp up their local presence,
first with budget trucks and later also with premium trucks. At the same
time, OEMs from emerging markets will start producing higher-quality
products. A gradual progression toward higher-end vehicles will ensue.
By 2020, the relative importance and geographical coverage of these
three truck segments will be very different to what we know today.
The transition will not be identical everywhere. Partly due to their close
proximity to Western Europe, the markets of Central and Eastern Europe
(CEE) will relatively quickly develop a greater share of premium vehicles.
Russia and China are already moving upscale, and India will follow suit,
albeit with a certain time-lag (see Figure 14). In the medium term, the lowcost segment will experience slower growth and thus lose market share. In
the long term, 2020 and beyond, we even expect this segment to shrink.
26
Manufacturers need to be aware of the big picture the broad brushstrokes

of globalization but must also pay close attention to the fine details and
differences. They must position themselves very carefully if they wish to
become winners in the process of globalization, rather than victims. An
array of strategic options are theoretically open to OEMs in both emerging
and established markets. But not all of them will work for every player in
every context.
27
4. The future is global Conclusions, options

and actions
The clear consensus among the experts we interviewed was that the
future of the truck industry is indeed global. We must now ask: What
are the strategic options that are open to today's OEMs? To begin this
discussion, we need to differentiate between the strategies available to
established triad manufacturers and those available to OEMs in emerging
countries. Moreover, as we have seen, we must distinguish between the
varying product requirements that prevail in the premium and low-cost
segments. In other words, OEMs must adapt their business models and
strategies for every segment in which they operate.
Figure 15 illustrates several possible strategies for OEMs. Our survey

revealed three basic strategies that are open to established triad manufacturers. However, it will be quite possible and in some cases desirable
for OEMs to pursue more than one strategy at a time.
28

Triad-based OEMs that are looking to globalize can essentially choose
between three strategies:
1. Enter the emerging market in the higher budget (or lower premium)
segment, adapting premium products to local market requirements.
Before local OEMs have developed the technical capabilities they need
to compete, acquire market share as the basis for further growth once
this segment becomes more important. This will initially impact the
long-haul segment, where quality, fuel economy and robustness count
for more. The effect will then gradually spread into the construction
and distribution segments.
Examples: Having established its own manufacturing base in Resende,
Volkswagen/MAN is currently the market leader in Brazil's heavy-duty truck
segment. Daimler has entered the Indian market, where its first locally made
trucks rolled out of the plant in Pune (CKD production of Actros). A similar
development can also be observed in the Russian market. Until 2005, this
market was dominated by local players whose combined market share topped
90%. Since then, global truck manufacturers have arrived and the situation
has changed markedly. Today, foreign brands already account for approximately
20% of total market sales. The long-haul segment in particular is completely
dominated by triad OEMs. Volvo, for example, has started work on a 15,000
unit p.a. plant in Kaluga. Scania too has announced plans to build an
additional 10,000 unit plant in Russia. Both companies have developed
special models for the Russian market Scania the P114GA Griffin and Volvo
the FM12 Region. These models are scaled-down versions of existing products,
assembled in low-cost countries, with minimal engine power, no choice of trim
or equipment, and so on. With its TGA WorldWide version, MAN is also offering
a model adapted for emerging countries. This vehicle is primarily exported to
Russia, Southern Africa and the Middle East.
2. Enter the emerging market in the low-cost (or lower budget) segment
by means of local engineering, sourcing, and production or sales.
Meet the current market requirements and grow into higher segments
over time as the market evolves, perhaps launching a second brand.
OEMs must remember that this strategy implies certain risks, as it
involves penetrating both a new segment and a new market/region at
the same time. Careful analysis of the market and selection of a suitable
local partner are therefore essential. The partner in question should
enjoy high brand recognition and a strong reputation at home.
29
Example: What was to be Daimler's new joint venture with the Hero Group
will now be Daimler's stand-alone production facility on the ground in India.
This facility will develop a new range of low-cost commercial vehicles for the
Indian market.
Branding issues will always require careful consideration where strategic
options 1 or 2 are considered. One Chinese OEM succinctly encapsulated
the difficulty faced by triad OEMs: "Triad OEMs will not lower their product
positioning with their own brands. They will choose to cooperate with local
OEMs to enter the budget or low-cost segment."
3. Enter the emerging market in the low-cost (or lower budget) segment,
meeting current market requirements only.
Follow up by exporting the low-cost truck or a second brand to other
emerging markets. This is an extension of strategy 2.
Example: Once it has gained a foothold on India's low-cost market, the
Daimler enterprise mentioned above also plans to export the vehicles
produced in India to other emerging markets.
30
4.2 Three winning strategies for OEMs in emerging markets

The strategies open to OEMs in emerging countries differ from those
of established triad manufacturers. Here again, combinations of more
than one strategy are possible:
1. Export a successful low-cost truck model to other emerging markets.
Benefit from the economies of scale and diversify risk.
Example: The largest Russian truck producer KAMAZ already exports
approximately 25% of its total production to markets such as India,
South America and Africa.
gradually moving into the budget segment.
Example: Most local OEMs in emerging countries currently pursue this model.
In some cases, they have established partnerships with global OEMs. Examples
include Dongfeng/Renault and SAIC/IVECO in China. More recently, Daimler
too has acquired a 10% stake in Russia's KAMAZ group. In return, KAMAZ will
benefit from new technology, thus shoring up its position in the Russian lowcost segment and protecting itself against new entrants from China and India.
entering more developed markets but not yet those of triad countries
as soon as the necessary requirements can be met.
This is an extension of strategy 2 (e.g. Africa, Russia).
Example: The majority of emerging market manufacturers do not yet satisfy the
product requirements that would let them export large volumes of vehicles to
developed markets. Some are, however, following this path. Tata, for example,
sells trucks in South Korea via its subsidiary Tata Daewoo Commercial Vehicle
Co., Ltd. Cost and price advantages could even create opportunities for
emerging market players to enter triad markets (see Figure 16). First, however,
the quality expectations of triad market customers have to be met, along with
local regulations on emissions, safety standards and so on. Manufacturers
in emerging economies will hardly be able to do this in the medium term.
To accelerate this process, they could, for example, commit to technology
or production joint ventures, share sales activities, establish new brands
and products in collaboration with triad OEMs, or as in the case of
Tata/Daewoo acquire established OEMs.
For all the many differences, nuances and preferences, one thing is abundantly clear: Each of the strategies outlined above involves globalization.
Globalization is not an option, it is an imperative.
31
It is the key factor that is currently shaping the development of the truck
industry. And it is what will drive the future strategic decisions of truck
manufacturers in both industrialized and emerging countries. Although
full convergence of the global markets is unlikely to occur within the
next decade, for the truck industry, the future is undeniably global.
4.3 Going global Final remarks
For the truck industry, the writing is on the wall. The responses gathered
by our study show that OEMs have, by and large, understood where the
industry is heading and the challenges that lie ahead of them. To address
these challenges, it is important to understand where OEMs stand today
and what strategic issues they must resolve. Furthermore, they must be
willing and able to adapt their business models.
First, however, they must respond to the challenges thrown out by
the financial and economic crises. The short-term implications of these
developments for OEMs include liquidity issues and capacity reduction.
Most OEMs, including some in emerging markets, have already implemented or announced plans to reduce capacity, lay off temporary workers
and take other such steps. Those manufacturers who take sufficiently
radical action now and show themselves to be highly flexible in terms
of workforce and inventory adjustments as well as overall cost reduction
will best master the capacity challenge.
While addressing these immediate and pressing concerns, however, manufacturers must not lose sight of their long-term strategic focus. As severe as
the current economic downturn is, it will be followed by a recovery three
to four years from now. Bearing in mind that future growth potential is
likely to be realized in the medium term, OEMs must prepare their business
now to exploit these upcoming opportunities. Consequently, truck OEMs
are well-advised to start defining cost-efficiency programs, reviewing their
product and brand portfolios, and clarifying their technology and R&D
priorities. Indeed, all this is only the point of departure. For many,
restructuring sales and service networks and initiating support programs
for strategically important suppliers, dealers and/or repair shops can be
equally important. OEMs should carefully consider investing in anti-cyclical
activities, such as diversifying their regional sales focus (especially with a
view to the BRIC markets), extending their value chain, introducing new
technology (hybrid technology, aftertreatment systems, lighter materials,
etc.) and stepping up aftermarket activities (by extending truck stores on
highways). At the same time, they can increase their long-term flexibility
by exploiting low-cost locations, optimizing their global footprint, making
their workforce more flexible, improving overhead efficiency and optimizing
engineering operations.
32
Globalization, as we have seen, presents different sets of challenges to

triad-based manufacturers and manufacturers based in emerging markets.
Accordingly, the players in each market must respond differently. We have
also seen that established OEMs in triad countries currently have the edge
in terms of their capability to reshape the industry. This window of opportunity will gradually close, however. Triad OEMs, having adapted their
strategies to the dictates of economic necessity and the demands of future
trends, must also adjust their business models in a number of ways if they
are to exploit their advantage over their challengers in emerging markets.
The general business models operated by OEMs must be aligned with the
requirements of globalization. Effectively, however, some OEMs now find
themselves stuck in the middle between the two. As things stand, their
business models necessitate a huge global coordination effort but promise
to yield only limited synergies (see Figure 17).
Three elements of change in OEMs' business models stand out as the
most powerful tools to advance truck OEMs' globalization efforts:
Platform architectures
> As markets and segments increasingly converge, they must develop
a one-truck concept that is valid for many markets. The US market
is still seen as an exception by the interviewees
33
> Many components/functions could certainly be interchangeable

between regions, although several executives see regional differences
in the forseeable future
> Minor regional differences will still be necessary to accommodate varying
legal requirements, differences in infrastructure and customer/driver
preferences. These differences should be catered to by an intelligent,
modular kit and must be kept as small as possible
> The synergies enabled by platform architectures must be leveraged
in two dimensions: across regions (as OEMs move into new geographical
territory) and across segments (as they increasingly cross the lines that
hitherto divided the premium, budget and low-cost segments)
Networks
> Purchasing, for example, should no longer be centralized but must
instead be regionally or locally based. One interviewee (representing an
OEM) realized savings of over 30% by applying this policy. At the same
time, strong global coordination is essential to ensure systematic
exploitation of all benefits
> Suppliers who have a global reach should deliver strategic parts worldwide. This policy should be combined with using regional suppliers
for less critical low-value parts
> Harmonized truck concepts necessitate harmonized global service
networks. A global logistics provider that sources its worldwide fleet
with a single OEM, say, will expect the same level of service in
Mumbai as in Michigan
34
Organization
> Collaboration between OEMs will increasingly be necessary to enable
market players to complement in-house technology with local market
expertise, say, as well as to help them cut costs
> A global truck concept demands a global organization. In other words,
engineering, purchasing and other key functions must be genuinely and
fully integrated around the world
> Resources can and must remain geographically distributed even where
they are unified on an organizational level. Resources might be physically
located in Japan, Europe and the NAFTA region, for example, but still
belong to the same organizational unit. Closer integration and the
exchange of staff are crucial in this context
At the same time, our interviewees indicated a clear regional focus in the
area of manufacturing. This indeed makes eminent sense as a way to combine the benefits of the aspects of globalization outlined above with local
preferences and requirements, specific content issues and varying legal
requirements.
Branding is a more complex issue, one that must be addressed very carefully
by every OEM that is committed to going global. The coordination between
parent and sub-brand is esssential for success. Brand platforms are necessary
to consistently position all brands across regions.
Brand extension and endorsement rules that are standardized and implemented systematically will help optimize business while clearly differentiating
brands and maximizing platform synergies (through batching, for example).
Service offerings must be coordinated within each group. In particular,
servicing different segments under one and the same brand will prove to
be a stiff challenge. As a general rule, brand organizations that want to meet
global requirements must become more professional and achieve a healthier
balance between central guidance and regional authority. This will also
impact component strategies.
Most components are already suited to multi-regional deployment. As
shown in Figure 19, the share of truly global components will nevertheless
increase significantly. This will happen mainly in relation to powertrains
(engines and transmissions) and electrical/electronic and software components. Regional differences will diminish more slowly for cab/body
and interior components.
35
The road to globalization will not be an easy one, either for OEMs based
in the triad economies or for their peers in emerging markets. As this study
clearly shows, however, there is little alternative. It is therefore expedient
for manufacturers in the developed and the developing world to proceed
with caution, giving due attention to the many issues they will need to
resolve along the way, and calling on outside expertise as and when
necessary.
An example: Most major established triad OEMs have entered developing
markets with their own brands. To compete in all segments, they will
need new brands as well. And as every seasoned OEM knows, multibrand
strategies present their own unique challenges and must be extremely
well thought through.
For triad OEMs, moving into the low-cost segment of an emerging market
sounds and is an exciting prospect. Here too, however, a special business model is required. As we saw earlier, it is imperative to weigh the
associated risks very carefully indeed. Targeting new segments and new
regional markets while adapting one's business model at the same time
is no mean feat by anyone's standards.
36
The business model that emerges should provide strategic solutions for
the particular product requirements of the sector in question. It should
also exploit low-cost sourcing, design and production. Above all, the OEMs
concerned must be aware that segment convergence will diminish the importance of this end of the market in the long term. The costs and benefits
should therefore be carefully weighed in advance.
Nor can all emerging markets be tackled in the same way. The Indian case
study reveals a number of peculiarities that must be accommodated if a
foreign OEM is to succeed on the subcontinent. At present, legal restrictions
too can still vary from country to country. Strict ownership regulations
prevail in China, for instance, and may therefore necessitate partnerships
with local manufacturers in order to penetrate this large and lucrative
market.
OEMs in emerging markets that are looking to penetrate triad markets must
likewise bear a number of important factors in mind. If they are to survive
(and thrive) in the sophisticated, quality-conscious triad markets, they will
need to find Western partners (OEMs, suppliers, etc.) and benefit from their
technology, production expertise and investment capital. Since only a few
such potential partners remain, time is clearly of the essence.
Geographical considerations too will necessarily influence the strategies
adopted by OEMs in emerging countries. Developments in those countries
in close proximity to triad markets follow a clear pattern. In the case of
Russia, international OEMs could enter the market early on with imported,
budget versions of their trucks, assembled in other low-cost countries
(Poland, Romania). Their rationale was to meet the market requirements,
establish an initial presence in the country and so create a basis for building
market share later on. Conversely, emerging markets further away from
triad markets will have to pursue different development trajectories in
line with their specific patterns of economic growth.
As triad OEMs scramble to expand eastward and their counterparts in
emerging countries prepare to go west, the truck market will become
irrevocably globalized. When the current crisis recedes, this globalized
market will hold out tremendous opportunities for those manufacturers that
move now actively and rigorously to position themselves for the future.
37
About the authors

Norbert Dressler
is a Principal at Roland Berger Strategy Consultants in Germany. He is responsible for the commercial
vehicle, agricultural and construction vehicle cluster within Roland Berger Strategy Consultants. In
his ten years of consulting experience worldwide, he has focused on the automotive OEM and OES
industries. He holds a Master's degree in Business Administration and has extensive experience of
operational topics such as engineering. Norbert focuses also on globalization of organizational models
and processes.
Jochen Gleisberg
is a Partner at Roland Berger Strategy Consultants in Germany. He focuses on the globalization of
operations such as R&D/engineering, procurement and product planning, as well as on the globalization
of organizational models and processes. His eleven years of consulting experience to date have given
him a strong focus on the truck industry (OEMs and suppliers) and the engineered products industry.
Gleisberg is also responsible for the Roland Berger "China Desk Germany". He holds a Master's degree
in Business Administration.
Jrgen Reers
is the Managing Partner for North America at Roland Berger Strategy Consultants. He leads the Automotive Practice in North America and has over fifteen years of experience advising top manufacturers,
suppliers and retailers worldwide in the automotive, commercial vehicle and construction/off-highway
equipment sectors. He has a strong background in corporate strategy, marketing and sales, R&D and
supplier management. Jrgen holds a Master's degree in Business Administration.
Max Blanchet
is a Partner at Roland Berger Strategy Consultants in France, where he is in charge of the automotive
activities. He focuses on engineering, manufacturing and distribution topics. In fourteen years as
a management consultant, he has been involved in key issues of the automotive sector: strategy,
operations improvement (R&D, supply chain, purchasing, manufacturing) and corporate
performance (organization and SG&A optimization).
Alberto Fernandez
is a Senior Consultant in the Automotive Competence Center at Roland Berger Strategy Consultants
in Germany, where he focuses on commercial vehicles. In his seven years of automotive experience,
he has developed a deep knowledge of globalization and optimization of operations in the truck
industry (OEMs and suppliers) and alternative powertrains. He holds a Master's degree in Electrical
Engineering from the Universities of Oviedo (Spain) and Munich (Germany).
Frank Pietras
is a Consultant at Roland Berger Strategy Consultants in Germany. Within the Automotive
Competence Center; he focuses on the commercial vehicle, agricultural and construction vehicle
clusters. In his two years as an automotive consultant, he has deepened his automotive industry
experience in various OEM and OES projects. He holds a diploma in International Management
from Magdeburg University.
38
Co-authors
Ralf Kalmbach
is a Partner at Roland Berger Strategy Consultants in Germany and co-leads the global Automotive
Industry Practice. In his nineteen years of consulting experience in the global automotive and
manufacturing industries, he has focused strongly on corporate strategies and business designs.
Kalmbach holds a Master's degree in Mechanical Engineering and Business Administration from
the University of Karlsruhe.
Jun Shen (Shanghai)

is a Partner at Roland Berger Strategy Consultants in China. He leads the Automotive Competence
Center at Roland Berger Greater China. Shen has in-depth knowledge and expertise in the functional
areas of corporate strategy, mergers & acquisitions, operational benchmarks, organizational restructuring
and sales & marketing management. He holds an MBA from China Europe International Business School
(CEIBS) and a Bachelor of Engineering from Shanghai Jiao Tong University.
Paul Gruppo (So Paulo)

is a Partner at Roland Berger Strategy Consultants in Brazil and holds responsibility for our business
in Latin America. In his twenty years as a consultant, he has worked in many different industries.
His special focus is on the automotive sector, where he is active in corporate strategy, business
performance improvement, distribution channels and corporate finance. He holds a BS degree
in Business Administration.
Boris Firsov (Moscow)

is a Partner at Roland Berger Strategy Consultants in Russia. He co-leads the Automotive
Competence Center at Roland Berger Russia and CIS. Firsov has comprehensive experience
in numerous areas of the automotive industry, including strategy, R&D, manufacturing, sales and
aftersales. He has worked extensively in Russia for global OEMs, Russian auto makers, suppliers
and dealers. He holds an engineering diploma from the Baltic Technical University (Russia) and
an MBA from the Kellogg Graduate School of Management (Illinois, USA).
Satoshi Nagashima (Tokyo)
is a Partner at Roland Berger Strategy Consultants and leads the Automotive Competence
Center in Tokyo. In his thirteen years of consulting experience at Roland Berger, he has
specialized in developing strategies for sales, marketing, distribution channels, product
planning and engineering. He holds a Ph.D. in Material Science.
39
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When a market of global significance departs from a long-standing
pattern of healthy growth, it is time to ask some searching questions.
Is it "just" the economic downturn that has put the brake on the
truck industry? Or are there other, more fundamental factors at
work? Where is the market heading? Are key players ready for the
challenges and changes ahead? And if not, how can they prepare
themselves for a future that, in many ways, has never seemed so
uncertain?
These are the vital issues addressed by Roland Berger Strategy
Consultants in the study "Truck industry 2020: The future is global".
Drawing on in-depth research and personal interviews with many
top executives in the industry, the study takes stock of an industry
that seems to have stalled and now urgently needs strategies
to shift back into gear.
Amsterdam
Bahrain
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Beijing
Berlin
Brussels
Bucharest
Budapest
Casablanca
Chicago
Detroit
Dsseldorf
Frankfurt
Hamburg
Hong Kong
Istanbul
Kyiv
Lisbon
London
Madrid
Milan
Moscow
Munich
New York
Paris
Prague
Riga
Rome
So Paulo
Shanghai
Stuttgart
Tokyo
Vienna
Warsaw
Zagreb
Zurich
Roland Berger Strategy Consultants, Germany

05/2009, all rights reserved
www.rolandberger.com
Jochen Gleisberg, Norbert Dressler

Truck Industry 2020: The Future Is Global: Norbert Dressler, Jochen Gleisberg

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Amsterdam

Roland Berger Strategy Consultants, Germany

Norbert Dressler, Jochen Gleisberg

Truck industry 2020: The future is global

Truck industry 2020: The future is global

Norbert Dressler, Jochen Gleisberg

Truck industry 2020: The future is global

Automotive Competence Center

2. Incumbents and challengers

3. Convergence in a world of differences

4. The future is global Conclusions, options and actions

About the authors

Truck industry 2020: The future is global

Automotive Competence Center

As premium triad OEMs "downgrade" their offerings to penetrate the

Truck industry 2020: The future is global

Automotive Competence Center

Truck industry 2020: The future is global

To facilitate a 360 view of this market, it is also necessary to distinguish

Automotive Competence Center

1.4 Fundamental drivers of change in the truck industry

Truck industry 2020: The future is global

2. Incumbents and challengers

Automotive Competence Center

Truck industry 2020: The future is global

Automotive Competence Center

2.3 The advance of globalization No longer one-way traffic

Truck industry 2020: The future is global

Automotive Competence Center

Case study: The Indian truck market

Truck industry 2020: The future is global

Automotive Competence Center

Costs can be reduced by scaling down engine sizes, for example, as

Truck industry 2020: The future is global

Other important players include Eicher Motors, which has a 6% share

Automotive Competence Center

Truck industry 2020: The future is global

3. Convergence in a world of differences

Automotive Competence Center

3.2 and how they are converging

For historical reasons, convergence in the NAFTA market will be limited.

Truck industry 2020: The future is global

The convergence of legal frameworks already entails a convergence of

Automotive Competence Center

Truck industry 2020: The future is global

Automotive Competence Center

A comparison of specific vehicles, as in Figure 13, makes the differences

Truck industry 2020: The future is global

3.4 becoming increasingly blurred

Automotive Competence Center

Manufacturers need to be aware of the big picture the broad brushstrokes

Truck industry 2020: The future is global

4. The future is global Conclusions, options

Figure 15 illustrates several possible strategies for OEMs. Our survey

Automotive Competence Center

4.1 Where the world's markets differ

Truck industry 2020: The future is global

Automotive Competence Center

4.2 Three winning strategies for OEMs in emerging markets

Truck industry 2020: The future is global

Automotive Competence Center

Globalization, as we have seen, presents different sets of challenges to

Truck industry 2020: The future is global